Bad Credit Mortgages Made Simple

Although the specific requirements can vary depending on the lender, there are some typical documents you might need.

1. Proof of income
2. Sole traders most lenders will request you provide the latest 2 years HMRC tax calculations with supporting overviews & it is essential that they match otherwise they will not be accepted. However, most bad credit specialist lenders will accept just one year’s trading and will also use the figure shown on the most recent documents compared to high street lenders that will traditionally average your income over the past 2 years which can reduce your income.
3. CIS workers you’ll be pleased to hear that some specialist lenders will accept your CIS vouchers as proof of income. In a lot of circumstances these can often be more favourable than using tax calculations as these are prior to expenses being claimed which means you are able to borrow more.
4. limited company Directors if you would like to use your retained profits as your proof of income, then most lenders will need to see your latest 2 years finalised company accounts. This can be a great way to maximising your borrowing capacity whilst reducing your personal tax liability.
5. Accountants’ certificates – Lots of lenders will accept these to verify your income providing they hold the required lender qualifications
6. Credit Reports are essential for all mortgage applications as it enables your mortgage advisor to assess your circumstances, these are not required just to establish your credit worthiness but also to calculate your affordability by assessing the information about your monthly outgoings. For example, any loans, credit card payments, and other financial obligations.
7. Debt-to-Income Ratio: Lenders will assess your debt-to-income ratio to determine your ability to repay the mortgage. Be prepared to provide information about your monthly debts, including loans, credit card payments, and other financial obligations.
8. Other Documentation: Depending on the lender and your specific situation, you may need to provide additional documentation. This could include letters of explanation for any gaps in employment or income, proof of residency, or other supporting documents.

Typically, lenders evaluate the number of years of accounts needed for a self-employed mortgage based on their lending policies and financial circumstances. As a minimum they will require 12-month trading history and for your first company accounts or tax returns to have been submitted to HMRC. However, if you are looking at borrowing at high LTV’s lenders will likely want to assess two to three years of accounts to gauge your income stability and mortgage suitability to feel comfortable that that mortgage will be sustainable for the term of the mortgage.

Here at AMA, we will find you the best options for your situation.

The amount you can borrow for a bad credit self-employed mortgage depends on factors like your income, debts, and the lender's policies. Typically, lenders assess your ability to repay based on these factors. Bad credit might limit your options as higher interest rates or a larger deposit requirement to support your application will impact how much you can borrow, this especially effects borrowers on lower incomes. Improving your credit profile and reducing debts will increase your chances of borrowing more.

Our mortgage specialists will assess your financial situation, guide you through available options, and help you find lenders willing to offer mortgages tailored to your circumstances.

Bad credit self-employed mortgages are like regular mortgages but may have stricter requirements. Lenders will check your credit history, and you might need a larger deposit, and face higher interest rates to offset the risks taken by the lender.

Since you're self-employed, you'll also need to provide documentation to verify your income, such as full company accounts if you are a limited company or Tax calculations (SA302’s) and supporting tax overviews if you are a sole trader, company & personal bank statements. Lenders typically assess your income stability and ability to repay the mortgage over the term applied for based on this information.

Overall, bad credit self-employed mortgages require careful consideration and preparation.  Here at AMA, our specialist mortgage advisers understand your situation and know which lenders to approach depending on your situation.

For bad credit self-employed mortgages, the deposit required might be higher than usual. While standard mortgages often need a deposit as low 5% to 20%. This is usually based on the type of property you are looking to purchase for example is it a new build or an apartment. However, for those with bad credit, lenders are likely to ask for more. Saving for a larger deposit will improve your chances of securing a mortgage with more favourable terms despite having bad credit.

Our specialist mortgage advisers understand the specific deposit requirements of lenders and shop around to get the best deal for you.